India's second largest private sector lender HDFC Bank 's second quarter profit met analysts' expectations, rising 20.4 percent year-on-year to Rs 3,455.3 crore.
Net interest income, other income, operating profit and lower provisions boosted profitability while asset quality remained stable, though net interest margin declined sequentially. Net interest income, the difference between interest earned and interest expended, grew by 19.6 percent YoY to Rs 7,993 crore in July-September quarter, which missed estimates due to lower-than-expected loan growth.
Loan growth for the quarter stood at 18.1 percent against analysts' estimates of 22-23 percent. Net interest margin remained steady at 4.2 percent on yearly basis but sequentially declined 20 basis points from 4.4 percent.
According to analysts polled by CNBC-TV18, profit was estimated at Rs 3,443 crore and net interest income at Rs 8,214.8 crore for the quarter. Provisions for bad loans dropped 13.5 percent year-on-year to Rs 749 crore in Q2 but sequentially increased 10 percent.
Asset quality was stable during the quarter with gross non-performing assets as a percentage of gross advances falling to 1.02 percent from 1.04 percent and net NPAs down to 0.3 percent from 0.32 percent on sequential basis. In absolute terms, gross NPAs increased 3 percent quarter-on-quarter to Rs 5,069 crore but net NPA fell 0.3 percent to Rs 1,489 crore in the quarter ended September 2016.
Other income (non-interest income) grew by 13.7 percent year-on-year to Rs 2,901 crore and operating profit rose by 19.5 percent to Rs 6,024.5 crore in Q2. HDFC Bank said cost-to-income ratio for the quarter was at 44.7 percent against 45.4 percent in corresponding period of last fiscal.
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